Understanding The Motivations of Procurement Departments

Any high value sales team will know all about procurement departments. They intercede themselves between the line management decision makers and the selling organisation.

Their mandate is very clear – to cut the cost of their organisations’ purchasing expenditure. To do this they have to create a market for the product or service they have been told to buy (because without a market they can’t drive cost out of the deal). Because they cannot be experts in everything they buy, they also need to deconstruct any proposal into understandable and comparable elements, which enables them to do an ‘apples with apples comparison’.

So the lesson for selling organisations is clear, the more ‘commodity like’ your offering is, the more simple to understand and the more similar to other suppliers the more likely you will suffer at the hands of the procurement people. The opposite are also true.

If you are selling something, if not genuinely unique, at least distinctive; something that is an integrated solution, rather than a set of separate components and something that requires real understanding rather than a superficial knowledge you are in a better position. Why? Because then the procurement people have to reply on their colleagues who require what you have to direct them as to what the most suitable option is.

And this is where you apply the killer blow. Because you have effectively cultivated your customer, aligned your offer better with their requirements than anybody else, and become the solution that is the preferred option, procurement will be told this is the one we want.

The last thing the procurement people will want to do is reveal that to you, they will still negotiate hard, try to ‘chip’ your offer, but aware of your strong position you have much more leverage to underpin your position.

Procurement aren’t going away, but they can be better understood and managed more effectively.